Bill English

Govt plan strikes the right balance, says IMF

Finance Minister Bill English has welcomed the International Monetary Fund’s assessment of the Government’s plan to return to surplus by 2014/15.

In its preliminary concluding statement on New Zealand, published today, the IMF notes the Government’s medium-term deficit reduction plan is aimed at limiting the increase in public debt to guard against future economic risks and contributing to lowering external debt.

“In our view, this strikes the right balance between the need to limit public debt increases, while containing any adverse impact on economic growth during the recovery,” the IMF says.

Mr English says returning to surplus in 2014/15, while challenging, will make an important contribution to reducing New Zealand’s external debt and improving national savings.

“The IMF and others clearly recognise the focus of the Government’s plan in achieving this important goal,” he says.

“Getting back to surplus will help create a buffer against future global shocks and, as the IMF notes, it will limit pressure on monetary policy and therefore the exchange rate. This will be important in easing headwinds for exporters and reducing the current account deficit.

“That’s why Budget 2012 will be a zero budget or close to zero, in terms of extra spending over the next four years. We will do that because we need to get back to surplus so we’re not continuing to increase debt.”